Article ID: | iaor2016590 |
Volume: | 83 |
Issue: | 1 |
Start Page Number: | 139 |
End Page Number: | 162 |
Publication Date: | Jan 2016 |
Journal: | Journal of Risk and Insurance |
Authors: | Mitchell Olivia S, Brown Jeffrey R, Kapteyn Arie |
Keywords: | information, government, statistics: empirical |
This article provides evidence that Social Security benefit claiming decisions are strongly affected by framing and are thus inconsistent with expected utility theory. Using a randomized experiment that controls for both observable and unobservable differences across individuals, we find that the use of a ‘breakeven analysis’ encourages early claiming. Respondents are more likely to delay when later claiming is framed as a gain, and the claiming age is anchored at older ages. Additionally, the financially less literate, individuals with credit card debt, and those with lower earnings are more influenced by framing than others.